Location: Cape May County, NJ | Metro: Cape May County, NJ HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,380 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,690 |
| 3 Bedrooms | $2,210 |
| 4 Bedrooms | $2,220 |
| 5 Bedrooms | $2,575 |
| 6 Bedrooms | $2,884 |
| 7 Bedrooms | $3,115 |
| 8 Bedrooms | $3,271 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,380 | $585,008 | 0.24% | F |
| 2BR | $1,690 | $639,293 | 0.26% | F |
| 3BR | $2,210 | $673,352 | 0.33% | F |
| 4BR | $2,220 | $1,116,184 | 0.2% | F |
| 5BR | $2,575 | $2,093,643 | 0.12% | F |
U.S. Census Bureau data (2024)
The analysis of ZIP code 08204 in Cape May, NJ, reveals a unique blend of yield and stability that is neither a high-yield/low-stability flip-style market nor a purely steady-cashflow zone. It stands out as an area offering moderate potential for rental income with some underlying risks.
Firstly, let's address the yield aspect. The Fair Market Rent (FMR) for a unit in ZIP 08204 for fiscal year 2024 is set at $1,500. This is significantly higher than the current market rent of $1,176, indicating a potential opportunity for landlords to increase their rental rates. However, when compared to the median home value of $705,497, the FMR suggests a relatively modest yield. Landlords should be aware that while there is room for rate increases, the overall return on investment might not be as high as in markets with lower property values.
Moving onto stability, the data shows that only 21.8% of residents are renters, which is a low figure and points towards a less stable rental market. A smaller proportion of renters means fewer potential tenants, increasing the risk of vacancies. Additionally, the days-on-market (DOM) statistic of 31 days indicates a slightly longer time to find new tenants, further highlighting the market's instability. On a positive note, the average household income of $82,466 provides some assurance that tenants can afford higher rents, although it does not compensate for the low percentage of renters.
In conclusion, ZIP 08204 presents a scenario where the rental market offers a moderate yield with the potential for increased rental rates above the current market level. However, the stability is compromised due to the low percentage of renters and slightly extended periods to secure tenants. For landlords and small-portfolio investors, this suggests a cautious approach is warranted. While the market is not entirely volatile, it does not provide the consistent cash flow typical of more stable rental zones.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.